Pan customers deny substitution claim

Some of the largest customers of Pan Pharmaceuticals said yesterday that they had never asked the contract pill-maker to substitute ingredients.

Yesterday's Australian newspaper quoted Pan founder Jim Selim admitting to substitution, but only at the request of companies that marketed Pan products under their own labels.

It was "unimaginable" that Sigma Company would ask Pan to change a product specification, said Sigma's chief financial officer, Mark Hooper.

"There would always have been an approved formulation which they would be expected to adhere to," Mr Hooper said. "It's an interesting approach to suddenly blame your contract customers for it."

Pan's creditors will vote on Monday either to wind up the company or support a rescue bid promoted by Mr Selim.

Customers claiming compensation for the costs of the April recall of all Pan products are expected to vote against the revival plan because it offers them less than trade creditors, such as ingredient suppliers.

The rescue plan includes a release from damages claims against Mr Selim, which voluntary administrator Tony McGrath has valued at more than $100 million.

Key Pharmaceuticals, which marketed a travel sickness drug made by Pan that left 19 people in hospital in January, said yesterday that the adverse reactions to Travacalm were not related to ingredient substitution.

Key managing director Tom Gregory said he had "no comment on Mr Selim's newly found status of innocent victim but would like it to be known that Travacalm was released for sale because of the provision by Pan of falsified analytical results".

Pan's largest customer, Mayne Group, which announced an after-tax loss of $34 million from the recall , denied asking Pan to change ingredients.

Mayne managing director Stuart James suggested Mayne was unlikely to support the rescue bid, saying it "will support the avenue that gives us the highest and most certain return of the money we are owed".

Mr McGrath estimates the rescue will give customer creditors at best 40 cents per dollar owed, compared with 88 cents under liquidation. In contrast, trade creditors would be fully repaid under Mr Selim's proposal.

Vanda Gould, chairman of Vita Life Sciences, which has claimed compensation of $12 million, said his company would vote for a rescue if it was sweetened to provide "roughly the same" as under liquidation.

Mr Gould said that all Pan's manufacturing for Vita Life was "in accordance with the approved specifications that we wanted".